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Financial Services

Review Panel Submits 1,100 Comments for FASB’s Financial Instruments Project

Financial Accounting Standards Board (“FASB”) staff members are currently reviewing over 1,100 comments regarding the late-stage drafts of its final standards for financial instruments. Hoping to meet its year-end publication deadline, the accounting board enlisted 29 panelists as part of a “fatal flaw” review process for feedback on the standards. Reviews generally take a few weeks to complete, but the FASB is taking a more detailed approach due to the standards’ complexity and significance. Of the 1,100 comments submitted, approximately 900 addressed issues concerning the asset impairment standard. The standard, which focuses on writing down bad loans and debt securities,. Read More.

U.S. Banks Seek Additional Guidance for Write-Downs

Showing concern for the Financial Accounting Standards Board’s (“FASB”) planned standard for writing down credit losses, the American Bankers Association (“ABA”) has asked U.S. bank regulators to create guidance associated with the accounting proposal. In a letter last month discussing the Basel Committee on Banking Supervision’s proposal Guidance on Accounting for Expected Credit Losses, ABA vice president Michael Gullette said banks are worried that there will be intense pressure to follow the guideline even if some parts are not related to the FASB’s final standard. The FASB’s final standard is likely to be based on proposed Accounting Standards Update No.. Read More.

FSOC to Give Earlier Notice in SIFI Designation Process

Recognized as a positive step towards increasing transparency during the systemically important financial institutions (SIFI) designation process, the Financial Stability Oversight Council (“FSOC”) will give financial companies an earlier notice when under consideration for tougher regulatory supervision by the Federal Reserve. Approved on February 4th, the FSOC’s decision is in response to criticism over non-bank companies unfairly receiving the designation under a process created by the Dodd-Frank Act. The decision also changes the FSOC’s policy of informing prospective SIFI designees at three-part review process’ final stage. Instead, financial institutions will now be notified in the second phase of the review. Read More.

SEC Issues Final Reporting Rules for Financial Swaps

Enhancing its supervision of financial swaps, the Securities and Exchange Commission (“SEC”) has announced two final reporting rules that address a major weakness in the capital markets. Issued on February 11th, Release No. 34-74246, Security-Based Swap Data Repository Registration, Duties, and Core Principles, establishes registration and governance policies for swaps data warehouses that collect trading information; and Release No. 34-74244, Regulation SBSR—Reporting and Dissemination of Security-Based Swap Information, which outlines rules for communicating trades to the data warehouses. Per the final rules, data warehouses are required to record swap trades and store the data for five years, estimate brokers’ positions. Read More.

Consultation Paper on Expected Loss Model for Banks Issued

To prepare banks for the adoption of the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board’s (“IASB”) standards for writing down assets, the Basel Committee on Banking Supervision (“the Basel Committee”) has proposed guidance discussing its expectations for bank risk management procedures. Issued on Monday, the consultation paper outlines what is expected from banks for credit risk practices once they implement IASB’s July 2014-issued International Financial Reporting Standards (IFRS) 9, Financial Instruments, and FASB’s upcoming standard based on proposed Accounting Standards Update No. 2012-260, Financial Instruments—Credit Losses (Subtopic 825-15). The accounting boards’ standards provide new requirements for banks. Read More.

Financial Stability Board Wants Consistency in Writing Down Bad Loans and Securities

With a public forum scheduled in April, the Financial Stability Board (“FSB”) hopes to push the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board (“IASB”) to follow suit with its approach for marking down bad loans and securities. At its roundtable discussion, the international group of banks, financial regulators and finance ministries seek a common approach that inspires banks to adopt standards for impaired assets similar to the accounting boards’ ongoing efforts. Both accounting boards have been working on their own standards; IASB’s International Financial Reporting Standards (IFRS) 9, Financial Instruments, and FASB’s Proposed Accounting Standards Update (ASU). Read More.